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Technical Convergence At Key Support Floor May Ignite New AUDUSD Bullish Impulse
Central Bank
Economic
Summary:
The proximity of these indicators suggests a major convergence in the upcoming sessions, which could act as a technical launchpad to regain its bullish momentum.
Buy
TradingAUDUSD
EXP
0.66859
Entry Price
0.67650
TP
0.66350
SL
0.67025 +0.00247 +0.37%
0
Point
Flat
0.66350
SL
CLOSING
0.66859
Entry Price
0.67650
TP
The U.S. labor market continues to exhibit remarkable resilience, with initial jobless claims falling to 198,000 last week from a previous 207,000, significantly undershooting market expectations. Continuing claims also saw a decline to 1,884,000, further bolstering the narrative of a robust domestic economy. These labor metrics complement other strong indicators of economic activity, including a solid rebound in retail sales and a Producer Price Index (PPI) that remains stubbornly elevated, highlighting persistent inflationary pressures within the system.
Specifically, the U.S. Census Bureau reported on Wednesday that retail sales surged by 0.6% in November, reaching $735.9 billion. This performance follows a 0.1% contraction in October and comfortably surpassed the market consensus of a 0.4% increase. Simultaneously, both headline and core PPI reached 3% on a year-over-year basis for November. Investors remain highly attuned to the weekly jobless claims report due later on Thursday, alongside scheduled commentary from several Federal Reserve officials.
Currently, Federal Reserve officials remain divided regarding the appropriate path for monetary policy. Atlanta Fed President Raphael Bostic emphasized that inflation remains far from its intended target, necessitating a restrictive policy stance. In contrast, Neel Kashkari of Minneapolis noted a stabilizing labor market amidst resilient growth. Conversely, Governor Miran and Philadelphia’s Anna Paulson have adopted a more dovish tone; Miran reiterated the necessity of 150 basis points of easing this year, while Paulson suggested the 2% target could be achieved by year-end. Amidst these divergent views, Chicago Fed President Austan Goolsbee underscored that central bank independence is the vital key to maintaining long-term price stability.
In Australia, the momentum appears to be cooling slightly following the release of consumer inflation expectations. The January reading declined to 4.6% from 4.7%, suggesting that while households still anticipate elevated price pressures, they expect the pace to slow marginally. The Reserve Bank of Australia (RBA) recently maintained its official cash rate at 3.6%, acknowledging that while inflation has decelerated significantly from its 2022 peak, it remains above the bank's 2%–3% target range.
Technical Analysis
The AUD/USD pair is currently navigating a corrective phase and has found a significant support floor in the 0.6664 zone. This specific region has triggered several bullish rebounds in the past and is attracting renewed attention as it aligns with the upward trajectory of key moving averages.
The 100-period Moving Average (MA) is currently positioned at 0.6698, while the 200-period MA sits at 0.6655. The proximity of these indicators suggests a major convergence in the upcoming sessions, which could act as a technical launchpad for the price to regain its bullish momentum.
The current technical structure reveals a promising transition of interest. The MACD signal lines have completed their corrective "discharge" phase and are now approaching neutral territory with an inclination that suggests the start of a new impulse. This movement is synchronized with a histogram that is beginning to turn positive, indicating that selling pressure has exhausted itself exactly atop the dynamic moving average support.
If this bullish crossover consolidates above the zero line, it would confirm a successful "oscillator reset." Such a development would validate the strength of the primary trend and project a renewed attack on recent highs, moving past the current sideways consolidation to seek liquidity at superior levels. However, traders should exercise caution: a decisive break below this support zone would invalidate the immediate bullish thesis and open the door for a much deeper structural correction.
Trading Recommendations
Trading direction: Buy
Entry price: 0.6686
Target price: 0.6765
Stop loss: 0.6635
Validity: Jan 28, 2025 15:00:00
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